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Will airline mega-mergers be good for travelers?

by Edward Hasbrouck, author of "The Practical Nomad"

Will airline mega-mergers be good for travelers? No.

Airline mega-mergers will lead to higher fares, fewer direct flights,
less choice, and worse service for travelers. And the damage will continue
long into the future, since these mergers will make it even harder for new
airlines to get started.

Airlines want to merge because they think they will make more money that
way. Larger airlines don't have lower costs -- some smaller airlines have
much lower costs. Mergers will lead to higher airline profits only if mega-
airlines are able to charge higher fares, or restructure their routes to
reduce the number of flights.

Both of these are bad for passengers. Merged airlines will likely
operate fewer flights, and "consolidate" services. It's cheaper to
operate fewer, larger planes between a smaller number of hubs. But that
means fewer direct flights, more people changing planes, and flight delays
and overcrowded terminals when more, larger planes converge on mega-hubs.

Mega-mergers will mean more airports monopolized by one or two airlines.
Airlines have a proven propensity to raise prices wherever lack of
competition -- and lack of enforcement of Federal antitrust law -- makes it
possible. Since airlines were deregulated, they have raised prices both at
their "fortress hubs" and at small airports that are "spokes" on the route
system of only one or two airlines.

Airlines claim that bigger airlines will offer passengers conveniences
like single-airline ticketing and baggage checking to more places. But
airlines have had systems in place for decades that permit through fares,
ticketing, and baggage checking between airlines. What travelers care about
is price and quality of service, and neither will be improved by mega-
mergers. Airlines are exempt from almost all state and local fraud,
truth-in-advertising, and consumer protection laws. Airlines have abused that
exemption to the max, with deceptive practices like "code sharing" and ads
for "half roundtrip" fares that no other businesses could get away with.

Despite airlines' hypocritical prattle about "open skies" and the need
for "global competitiveness", airlines benefit from the most extreme
protectionism of any industry in the USA. Domestic US air routes are closed
completely to foreign airlines, and foreign ownership of US airlines is
forbidden.

The public would best be served by measures to open the American skies to
global competition; repeal Federal "preemption" of airline regulation; step
up enforcement of existing Federal airline laws; ban code sharing as
fraudulent; and reintroduce regulation of routes and fares in those markets
without real competition.